Money Transfer to Philippines Review and Tips

Money Transfer to Philippines Review and Tips 1

Money Transfer to Philippines Review and Tips

Are you sending money from USA to Philippines?

Want to get the most pesos for your dollars or receive most dollars in Philippines?

Not sure which provider is the best, cheapest or fastest?

Should your funds be received in pesos or dollars?

YOU came to the right place!

We will cover all most important topics:

  1. Money Transfer to Philippines: current state and key trends
  2. Pesos to dollar exchange rates and timing
  3. Top money transfer providers
  4. Receiving money transfer in pesos or dollars
  5. Sending larger money transfer amounts
  6. Choosing the best receiving method
  7. Finding the best way to send money

Please note this post is specific to the Philippines. If you are looking for general knowledge of how to best send money, please review this other SaveOnSend blog post first.

Before we get started… Great news if you are a consumer sending money from the USA to the Philippines: it is currently one of the most competitive corridors from the USA, attracting more providers and larger investments than many other destinations. You are in luck with a variety of choices and lavish promotions which don’t exist for some other destinations. So you could make a relatively safe assumption that when transferring money to the Philippines with any top provider, you will get a reasonable price and service. Overall, the cost of sending money has been declining worldwide, with providers’ margins dropping 30% just in the last decade:

But we are recommending trying providers with the cheapest price – this way, you are helping not just yourself but also supporting the Philippines’ growth. By always using the least expensive method of sending money home, each 1% in savings generates an additional $350 million annually for your families and the Philippines’ economy.

Money Transfer to the Philippines
Money Transfer to the Philippines

Reliable money transfers to the Philippines

More money makes it home from the United States to the Philippines with Remitly. Get ₱51.25 per dollar and pay no fees on your first transaction.

Reliable money transfers to the Philippines
Reliable money transfers to the Philippines


Cheap Reliable money transfers to the Philippines
Cheap Reliable money transfers to the Philippines


1. Money Transfer to the Philippines: current state and key trends

According to Pew Research, the Philippines is the world’s #3 destination for receiving money after India and China. This position could be in part explained by the Philippines is probably the only country in the world that has institutionalized the deployment of its people to work overseas since 1995. Filipinos migrants’ top occupation is seafarers, representing 20% of all remittances. Remittances from OFWs to the Philippines account for 8.5% of GDP. Remittances are so important to the economy of the Philippines that in October 2017 the government created a bank for OFWs to compete for remittances with private banks and money transfer specialists.

Out of all countries from where OFWs-Filipinos send money to the Philippines the USA is by far #1:

There are 3+ million Filipinos in the USA, with around 40+% living in California and another 10% in Hawaii. 35% of USA Filipinos live just in 3 metropolitan areas: Los Angeles, San Francisco, and New York City.

In comparison with other migrant groups in the USA, Pinoys tend to have an average level of education but earn a higher income (see the chart below). This might be in part due to a higher portion of Filipinos employed as nurses and personal care workers.

Filipinos send money from the USA using both an online channel (a provider’s website or mobile app) and via a cash agent. Since many Filipinos get paid in cash they prefer to sending cash transfers to the Philippines as well. This way they avoid depositing money into a bank account and potentially facing a tax liability. Transfers are received either in pesos or dollars, depending on the preferences, exchange rates, and other factors (more on this later). Of all transfers being sent digitally, 75+% are received via cash agents in the Philippines.

If you are reading this and haven’t yet tried sending money to the Philippines online, via a website or mobile, you should definitely give it a shot. Most of the well-known providers have such tools, and the setup shall only take a few minutes. Once you link your bank account or debit card, you might be surprised how easy to send money online and how much you could save. This way, all your past transfers are available for your review any time, plus your future repeat transfers shall take less than a minute to complete since you don’t have to enter the same information again. There are also significant cost advantages (more on this later).

2. Pesos to dollar exchange rates and timing

Are you wondering if you shall wait for pesos to increase in value or for a dollar to fall? Trying to time the best exchange rate is unbelievably difficult if not impossible. If anybody gives you advice on this topic while not making millions trading on the same information, it might be a sign that you shouldn’t follow such recommendation. Still not convinced? Look at the graph below for changes in the exchange rate of pesos to a dollar during the last 10 years – do you see any logic in the exchange rate’s short- or long-term movements?

While the recent trend is of peso depreciating vs. the US dollar, you can notice long periods when the exchange rate decreased:

However, there is a more practical approach to timing money transfers – based on the analysis of FX markup (the difference between a pesos-dollar exchange rate that providers get on the market vs. an exchange rate that you get from a provider).

Not only each money transmitter applies a very different FX markup, but it also makes daily changes to its FX markup to maximize profits. Some providers are even applying different FX markups for different sending-receiving methods. For example, for sending money from USA to Philippines, MoneyGram has different peso-dollar exchange rates for sending a) online-to-bank, b) other sending-receiving methods; or Wells Fargo has different exchange rates for sending a) $25-250, b) $251-1,000, c) $1,001-2,000, d) $2,001-3,000. So how do we use this knowledge against money transmitters?

Look at this chart showing fluctuations in FX markups across remittance providers for USA-to-Philippines:

Despite everything we read about so-called “disruption” in remittances, FX markup has been overall stable across providers. Western Union had been gradually increasing FX markup during 2015 and 2016 but then cut in half in early August of 2016.   One of the world’s largest money transfer providers, Ria Money Transfer, significantly increased its FX markup during the summer of 2015 and has pushed it even higher since then.

USA-to-Philippines FX Markup across providers: 2015 till August 20th

Such swings are, unfortunately, too common among providers and not just when sending money to the Philippines:

It means consumers cannot trust its favorite provider to apply a consistent price and must compare prices across providers with tools like before each transfer. One particular exception is TransferWise which makes money only on charging fees without any FX markup.

The way you could take advantage of these price swings is by comparing the FX markup of your favorite provider to its average in the previous few months based on the SaveOnSend charts. If FX markup is at or below the average trend, you could proceed with sending money; otherwise, it might make sense to wait 1-2 weeks till your provider’s FX markup comes down to its average level.

Why do providers increase their margins? Shouldn’t more competition drive lower prices? In theory – yes, but only if consumers care about it. Fortunately for providers, Filipinos are known for their loyalty and are not as price-sensitive as other nationalities. For example, compare previous charts with what the same providers are charging Chinese and Indian migrants in USA:

As you could see, Filipinos are being charged 1-2% more by the same providers. Being loyal does not pay…

3. Philippines Top money transfer providers

In otherwise competitive field, there are 2 key providers for USA-to-Philippines remittance corridor. Xoom leads among consumers sending money to the Philippines online and Western Union among those who transfer money via cash agents. About 1/3rd of Xoom’s revenues comes from money sent from the USA to Philippines, and this provider is known for almost instant money transfer and good customer tools and support. Western Union, on the other hand, is known for the largest network of cash agents worldwide, but takes longer to deliver funds (more on pricing comparison later).

Money Transfer to Philippines: Western Union kiosk in Philippines

Many Filipino migrants use Walmart to send money home assuming that it is a cheap option. While it might be true for buying groceries or clothes, Walmart is one of the most expensive options for sending money home:

4. Receiving money transfers in pesos vs. dollars

Compare the previous table with sending the same amount, $500, between linked bank accounts but in dollars. As you could see, the same providers are charging less for receiving in dollars. It is because these providers don’t lose money on the spread of buying and selling pesos and could pass those savings onto you. Therefore, if your receiving party in the Philippines doesn’t need to convert dollars into pesos, send them dollars:

Starting 2014, there have been a few startups facilitating money transfer into the Philippines via Bitcoin / Blockchain / Crypto , but their market share was less than 0.03% as of 2018 (for more on this topic, read our article here).

5. Sending larger money transfer to Philipines

Let’s now review how much we could save by sending larger amounts. Let’s compare the margins of the same providers when customers transfer $2,900:

As you can see, some providers charge a lower margin for sending larger amounts.

Choosing the best receiving method

The number of consumers in the Philippines with a bank account is growing, reaching 20-40% across income levels. It is always less expensive to send money via a digital method. This way, you don’t have to cover the extra costs of agent compensation, real estate, cash handling, and compliance.

As we discussed in another post on the overall strategy for sending money, “better” and “best” money transmitter is different for each of us based on our unique preferences among cost, speed, convenience, and customer service. No one provider clearly leads among all these factors.

One provider is worth specific mentioning:

TransferWise – this money transmitter began servicing the USA-to-Philippines corridor in January 2015 and competes very aggressively on price. As we mentioned earlier in this post, TransferWise has a unique business model of making money only on fees (no FX markup). For now, TransferWise is only available for bank-to-bank transfers and only for transfers received in pesos. If it works for you, we recommend you to try them because of their low margins BUT ONLY when sending larger amounts. For smaller transfers, they are not the cheapest. After each transfer, please describe your experience on SaveOnSend so others could learn from you.

To summarize, here are the leaders among providers that send money from the USA to the Philippines:

  • Fastest: Xoom, TransFast, PNB
  • Cheapest: 1a) pesos – TransferWise, 2) dollars – Transfast, Ria Money Transfer
  • Availability of cash pick-up locations: Western Union, MoneyGram

There is another consideration: consistency of experience with a particular provider. As consumers, we like to pick a particular brand or local business and use them for years. That experience includes not just service but also prices. Imagine if your favorite restaurant or grocery store keeps changing prices every time you go there plus they also have different prices based on how much you purchase. Western Union and MoneyGram are by far the worst offenders in this regard. Not only their fee structure has more tiers, but they are also frequently changing their prices.

On this dimension our favorites: TransferWise, Remitly, and Ria Money Transfer, all with the extremely simple, easy to remember fee structure that doesn’t change every couple months.

In Summary…

Hopefully, you found this overview helpful and feel more confident in how to find the best approach for YOU when sending money from the USA to the Philippines. If we missed anything, please leave a comment. We will be keeping this post regularly updated, so come back soon!

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